1. Field of the Invention
The invention relates to pharmacy benefits and more particularly to a system and method for managing pharmacy benefits to permit costs to be reduced.
2. Description of the Related Art
Health care costs in the United States have risen dramatically over the past several decades. In 1999, health care spending accounted for 13 percent of the GDP. In the United States, most health care is delivered through employer sponsored health care plans, such as Health Maintaining Organizations (HMOs). The basic premise of an HMO is to permit the health care benefit delivered to patients, i.e. recipients, to be “managed” in order to reduce costs.
Prescription drugs are marketed and delivered in a unique manner with respect to other health care benefits. Accordingly, management, and thus cost reduction, of prescription drug benefits has historically been approached differently. Typically, Pharmacy Benefit Managers (PBMs) have been used to process claims for prescription drug benefits and attempt to control costs. PBMs ordinarily are entities that are independent of the benefit provider, e.g. an insurance company, and contract with the benefit provider to process claims for pharmacy benefits.
However, costs for prescription drugs have grown faster than any other expenditure for health care costs in recent years. In 1999 alone, spending for prescription drugs in the United States rose nearly 17 percent to $100,000,000,000.00 and is projected to continue to increase faster than any other category of health care costs over the next decade. Currently, expenditures for prescription drugs account for over 20 percent of the budget for many health care plans. It is clear that the use of PBMs, and other efforts to reduce health care spending have not been effective in reducing expenditures for prescription drug benefits.
PBMs ordinarily develop “formularies”, i.e. a lists of drugs in specific classes that will be given favorable treatment. For example, the formulary may specify only a single particular drug in a class of drugs which can be prescribed under a particular pharmacy benefit plan or may classify tiers of drugs in order of preference. In some cases, the formulary directs the patient to the lowest cost drug. However, PBMs often operate under agreements with prescription drug manufacturers which include complex rebate plans. Accordingly, it is not always clear if the formulary will result in delivery of the appropriate prescription drug that is truly lowest in cost to the patient, through deductibles and copayments, and to the prescription drug benefit provider, such as an HMO.
Further, the distribution channels for prescription drugs in most cases are totally separated from the payment channels. For example, a patient may be diagnosed by a physician as having a condition that requires medication. The Physician then decides on a class of drugs appropriate for treatment of the diagnosed condition and prepares a prescription for one of plural drugs in that class. The patient then takes the prescription to a pharmacy for dispensing of the prescription drugs. If the patient has a prescription drug benefit, e.g. through health insurance coverage, the pharmacist will utilize the PBMs computer system to apply the formulary associated with that patient's benefit plan, dispense the prescribed drug, collect any deductible payment or copayment from the patient in accordance with the formulary and benefits structure of the applicable plan, and submit claims documentation to the claims processor, such as a PBM, to collect the remaining cost for the dispensed drugs.
Significantly, the patient and doctor ordinarily are not aware of the costs of the dispensed drugs and costs of alternatives thereto before, during, or after dispensing of the drugs. Further, the provider of the drug benefit, such as an employer or HMO are not aware of this information at the point of purchase either. Accordingly, prescription drugs are dispensed without consideration for direct costs. The choice amongst alternatives is made solely by the physician without knowledge of any cost effects for the patient of the benefits provider. Often the creator of the formulary has direct economic interests that may not ally with those of the patient and benefit provider. The PBM or other entity processing pharmacy benefit claims has cost information and other relevant information. However, this information often is used primarily to drive markets to profitable products and is often obfuscated by complex rebate algorithms. Such information is not available to the patient or their physician at the time of making drug therapy decisions. Therefore, costs are not always minimized for drug benefits and thus the drug benefits are not managed well.
Recent advances in communication, the Internet in particular, have facilitated on-line distribution of various information. In fact, some of the pharmacy information described above has been exchanged over the Internet. The Internet is a worldwide network of computers linked together by various hardware communication links all running a standard suite of protocols known as TCP/IP (transmission control protocol/Internet protocol). The growth of the Internet over the last several years has been explosive, fueled in the most part by the widespread use of software viewers known as browsers and HTTP (hypertext transfer protocol) which allow a simple GUI (graphical user interface) to communicate over the Internet. Browsers generally reside on the computer used to access the Internet, i.e. the client computer. HTTP is a component of TCP/IP and provides users access to files of various formats using a standard page description language known as HTML (hypertext markup language), and more recently XHTML (extensible hypertext markup language). The collection of servers on the Internet using HTTP has become known as the “World Wide Web” or simply the “Web.”
Through HTML, and interactive programming protocols, the author of a particular Web page(s) is able to make information available to viewers of the Web page(s) by placing the Web page(s) on an Internet Web server in HTML format. The network path to the server is identified by a URL (Uniform Resource Locator) and, generally, any client running a Web browser can access the Web pages by the URL.
The Web has become ubiquitous in businesses and homes because it has proven to be convenient for various applications, such as news and data delivery, conducting banking and investment transactions, and the like. The Web and its authoring, transmission, and display protocols, such as browsers, HTML, CGI (common gateway interface), Active Server Pages™, and Java™, have become a worldwide standard for information exchange. However, in view of the market considerations discussed above, and other factors, the Web has not been harnessed as an effective tool in managing pharmacy benefits.